Procurement
6 things you need to know to manage supply chain risk

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6 things you need to know to manage supply chain risk

As we head into 2023, risk is at the forefront of most procurement professionals’ minds. And, as always, Scoutbee has its finger on the pulse. On December 13th, in collaboration with our partner, Prewave, we hosted a webinar on supply chain risk, where we discussed how supplier data can be unleashed to effectively manage and mitigate supply and supply chain risk.

Dozens of procurement professionals gathered online for the interactive session, ably moderated by industry guru, Jon Hansen, with experts in the field, Dawn Tiura (SIG), Harald Nitschinger (Prewave), and Justin Drees (Scoutbee) providing valuable insights. In case you missed it – and because we’re so good to you – we’ve compiled some of the key takeaways here.

Supply chain risk management is a company problem

Although received wisdom suggests that responsibility for supply chain risk and risk management lies solely with procurement or sales, this is no longer the case. Savvy business leaders need to realize that the buck does not stop with procurement; supply chain risk touches every part of an organization these days, from operations to marketing and PR, from sustainability strategy to corporate security. Everyone’s getting their own slice of the risk pie. 

Leadership has to demonstrate a willingness to change

These days, change is coming at procurement professionals so fast it can feel like drinking from a fire hose. But either they learn to swallow faster and take it all in, or they need to step aside. Change is inevitable and it’s not going to slow down. The amount of data is also only going to increase, and organizations need to use the most sophisticated tools to deal with it. 

Leadership has to not only be comfortable with these changes but excited about them. They need to lead by example. Sometimes you need a leader who’s charging up the hill shouting “follow me!” At other times, that leader needs to be at the bottom of the hill helping people up, giving them the education, tools and services they need. Leaders need to be able to flex their style based on how their teams are responding.

Third-party risk management is a team sport

There has been a shift in the understanding of risk, and the scope of risk recognition is becoming broader. We can’t change what’s going to happen, but we can limit the fallout from these events, so it’s crucial that every single person in an organization is involved in looking for supply chain risk.

Some financial institutions in the U.S. are even rolling out risk management programs to every employee from top management to janitor level. They will all be trained on what third-party risk management is, and how everyone can contribute or help mitigate risk events. Given that 50% of enterprise breaches are integrated by a third-party supplier and most companies lack visibility beyond their first tier, this is an unprecedented but very welcome change in how organizations are dealing with third-party risk. 

Move from pull- to push-based systems 

With technology now more intuitive, and access to data faster than ever before, it’s tech’s job to make sure that information is in the right place at the right time. From an employee’s perspective, this could involve moving from a pull-based approach, for example, “pulling” information from a spreadsheet to a push-based system where, if something happens that shouldn’t, they get an alert. This alert could be related to a supplier that’s having issues, or when a particular risk threshold is reached. This information is then used to build a process, using the alert as the kick-off to jumpstart that process, thereby developing a far more effective way to integrate resilience into an organization’s supply base.

Predictive analytics are key

When you have access to so much data, it’s actually not useful. Dark data, dirty data… how do you get a handle on it all to help manage risk? Research shows that less than 5% of data is ever analyzed within an organization, often due to time constraints as the analyses are carried out manually by employees – a single supplier profile can take up to 60 hours!

However, technology can help companies to better organize their data and actually do the analytics for them. AI and tech can run these analyses automatically and surface insights in a seamless way so that you can act on this data more quickly and in a scalable manner. 

Be proactive, not reactive

Information is power. Visibility into your supply base is critical. Use the technology that’s available to understand where there might be a risk situation with a supplier or a particular region. Make proactive decisions today in order to spread risk, rather than waiting for the next crisis to hit and responding reactively.

Source alternative suppliers now, with precision, speed and quality using AI and web crawlers, and take the burden off procurement teams. You want to be the first to respond so you can take advantage of still existing inventories, not the last. That’s where your organization needs to be. 

In short, the technology is at your fingertips – use it. If you think your tech stack is complete, you haven’t looked at the market lately because it’s changing every day and the technologies are changing too.

It’s up to procurement leaders to investigate, to use their natural curiosity to keep constantly learning and educating themselves. This isn’t just going to be one digital transformation and done. This is a permanent mind shift that’s about constantly scanning the market to see what’s out there. 

Managing and mitigating risk in your supply chain isn’t going to be a destination but an ongoing journey. 

Book your spot now for our next webinar on predictions for 2023! Chris Sawchuk (Hackett Group), Jason Busch (Spend Matters), Michael Cadieux (Procurement Foundry), Kelly Ruigrok (GSES), and Roger D. Blumberg (Scoutbee) will discuss what 2023 has in store for procurement – and if theres any sense in making predictions any more!